COURT OF TAX APPEALS DECISIONS
THE CTA EN BANC RULED THAT THE 30-DAY PERIOD TO APPEAL A DENIED VAT REFUND RUNS FROM THE TAXPAYER’S OWN RECEIPT OF THE DENIAL LETTER, MAKING THE LATE FILING JURISDICTIONALLY FATAL DESPITE THE TAXPAYER’S CLAIM THAT ONLY ITS COUNSEL SHOULD HAVE BEEN SERVED. The Court of Tax Appeals En Banc stressed that under the Tax Code and applicable revenue regulations, the reckoning point for the 30-day period to appeal the denial of a refund claim is the taxpayer’s actual receipt of the denial, not the date its counsel is informed. The law explicitly requires that the denial be addressed and sent to the taxpayer-claimant, and such receipt constitutes valid service in administrative proceedings, unlike in judicial proceedings governed by the Rules of Court, where service on counsel is required. The Court explained that in tax cases, administrative service to the taxpayer is sufficient, and it is the taxpayer’s duty to communicate promptly with counsel. In this case, the petitioner admittedly received the denial letter directly but failed to relay it to its counsel in time, resulting in the appeal being filed beyond the statutory 30-day window. The En Banc characterized this lapse as plain negligence, not excusable neglect, and reiterated that the appeal period is mandatory and jurisdictional. It thus affirmed the Court in Division’s dismissal of the petition for lack of jurisdiction. (Manulife Data Services, Inc. v. CIR, CTA EB No. 2850, CTA Case No. 10138, February 26, 2025)
IN INPUT VAT REFUND FROM ZERO-RATED SALES, PROOF THAT SERVICES TO NONRESIDENTS WERE PERFORMED IN THE PHILIPPINES MUST BE SUBMITTED. The Tax Code grants a 0% VAT rate to certain services rendered to nonresident clients, provided four elements are met: (1) the services are other than processing, manufacturing, or repacking of goods; (2) they are performed in the Philippines by a VAT-registered person; (3) the recipient is a foreign corporation doing business outside the Philippines or a nonresident not engaged in business in the Philippines; and (4) payment is in acceptable foreign currency and accounted for under BSP rules. The Court found that petitioner’s call and administration services to Therapeutic Case Management Services Limited met the first element, but failed to establish the second element, performance in the Philippines, since the Service Agreement was silent on service location, no witness testified to such fact, and the Independent CPA’s conclusion lacked personal knowledge and was not binding under CTA rules. Applying the rule that tax refunds and exemptions are strictly construed against taxpayers, the Court ruled that petitioner did not discharge its burden of proof, leading to the denial of its claim for ₱1,782,368.41 in unutilized input VAT for the 3rd and 4th quarters of 2018. (Organisational Support Services, Inc. vs. Commissioner of Internal Revenue, CTA Case No. 10525, February 14, 2025)
VAT OFFICIAL RECEIPTS MUST STATE THE ACTUAL NATURE OF SERVICES AND COMPLY WITH ALL INVOICING REQUIREMENTS. VAT official receipts must indicate, among others, the actual “nature of the service” and comply with all invoicing requirements, as these are mandatory for substantiating VAT refund claims. In this case, the petitioner’s receipts covering sales to PEZA-registered clients merely stated “downpayment” or “others,” which do not specify the actual services rendered, and were unsigned by the authorized signatory despite the petitioner’s own printed notation that such signature is required for validity. The Court held that strict compliance with invoicing and substantiation rules is essential to ensure accuracy and veracity in VAT claims; thus, the absence of the required details and signatures justified the denial of zero-rating for these sales. (Tetra Pak Philippines, Inc. v. CIR, CTA Case No. 10546, Amended Decision, March 25, 2025)
TAXPAYER MUST PROVE THAT THAT THE BUYER IS AN EXPORT-ORIENTED ENTERPRISE – OVER 70% EXPORT SALES IN THE PRECEDING TAXABLE YEAR AND VALID FOR THE CLAIM PERIOD. Sales of raw or packaging materials to an export-oriented enterprise, defined as one whose export sales exceed 70% of total annual production in the preceding taxable year, qualify for 0% VAT, provided the enterprise’s status is established for the relevant period of sale. Petitioner sought VAT zero-rating based on DTI-EMB Certificates of Accreditation under RA No. 7844 and letters showing export percentages. However, the DTI-EMB list covered only July 2018, outside the 4th quarter 2018 claim period, and did not show its 2017 export sales ratio; another client’s list covered only January–February 2018 and reflected a 92% export rate based on 2016 data, not the required 2017 figures. The Court ruled that mere accreditation is insufficient without proof of export-oriented status for the specific claim period, thus sustaining the denial of VAT zero-rating for these sales. (Tetra Pak Philippines, Inc. v. CIR, CTA Case No. 10546, Amended Decision, March 25, 2025)
INPUT VAT ON IMPORTATIONS IS REFUNDABLE ONLY IF TIED TO ZERO-RATED SALES WITHIN THE CLAIM PERIOD NOT WHEN PAID. VAT-registered taxpayer may claim refund of input VAT on importations only when such VAT is directly attributable to zero-rated sales made within the period of claim. Here, the petitioner sought reconsideration of disallowed input VAT on importations totaling ₱1,571,474.51, asserting that the refund period should be reckoned from the date of payment of VAT to the Bureau of Customs. The Court rejected this argument, clarifying that entitlement depends on when the related zero-rated sales were made, not when the VAT was paid. It found that certain importations either did not match the items sold under zero-rated invoices or, though related, pertained to sales outside the fourth quarter of CY 2018, rendering them ineligible. However, a small amount of ₱125.25 for matched sales was reconsidered as valid. Ultimately, the Court partially granted the petition, ordering a refund of ₱9,174,250.45 as excess and unutilized input VAT attributable to valid zero-rated sales for the quarter. (Tetra Pak Philippines, Inc. v. CIR, CTA Case No. 10546, Amended Decision, March 25, 2025)
REASONS FOR DISALLOWANCE OF INPUT VAT DUE TO INVOICING REQUIREMENTS: Supporting documents which the Court noted as being partly blurred, blackened, and/or not properly scanned; input VAT on purchases of goods supported by documents other than VAT invoice; input VAT on purchases of service supported by documents other than VAT OR; input VAT on purchases of services reported as purchases of services supported by VAT ORs, but the nature of services were not indicated/statement not attached/nature of payment cannot be ascertained; input VAT on purchases of services supported by VAT ORs but input VAT amounts per OR are lower than the amounts per claim (Overclaimed input VAT); input VAT on purchases of services supported by VAT ORs but the input VAT amounts were not separately indicated; supporting documents not found in the scanned file but included in the claim (Manulife Data Services, Inc. v. CIR, CTA Case No. 10666, January 2025); incomplete or incorrect name, address, or TIN of the petitioner; absence or inaccuracy of VAT amounts; missing unit cost, quantity, or VATable amount; use of the Liaison/Branch Office address with the Head Office TIN (or incomplete branch TIN); no indication of the nature of the payment for services; illegible or missing TIN; certain documents reflected prior period purchases, unsupported transactions, or payments not valid for input VAT claims. (Mindanao Container Corporation v. CIR, CTA Case No. 10513, February 19, 2025)
ZERO-RATING REQUIRES PROOF THAT SERVICES RENDERED TO A NONRESIDENT WERE PAID IN ACCEPTABLE FOREIGN CURRENCY AND ACCOUNTED FOR UNDER BSP RULES, WITH A CLEAR NEXUS BETWEEN PAYMENT AND THE ZERO-RATED SALE. A VAT refund for unutilized input tax on zero-rated sales requires, among others, proof that the sales are zero-rated and that payments received are in acceptable foreign currency, duly accounted for under BSP rules, and directly attributable to such sales. While PPD Pharma established its VAT registration, the nonresident status of its client PPD Global, and timely filing of claims, it failed to prove that the $7.5 million received was exclusively payment for zero-rated services rendered in Q3 and Q4 of 2018. Evidence, including Official Receipts, Proofs of Remittances, and bank certifications, merely showed foreign currency inflows without linking them to the alleged service fees, especially since the amounts could also represent advances or loans. The absence of billing statements or other documentation to establish this nexus led the court to deny the refund claim for insufficiency of evidence. (PPD Pharmaceutical Development Philippines. Corp. v. Commissioner of Internal Revenue, CTA Case No. 10466, February 6, 2025)
DEPARTMENT OF ENERGY (DOE) REGISTRATION IS MANDATORY TO AVAIL VAT INCENTIVES, BUT HYDROPOWER SALES TO NPC STILL QUALIFIED FOR ZERO-RATING WARRANTING A VAT REFUND. Under the Renewable Energy Act and its implementing rules, registration with the Department of Energy is required before a renewable energy developer can enjoy fiscal incentives such as the 0% VAT rate. This rule means that simply being engaged in renewable energy generation does not automatically grant such benefits. In this case, the Court found that CBK Power Company Limited, though operating a hydropower plant, was not entitled to VAT incentives under the RE Law due to its admitted non-registration with the DOE. However, the Court still recognized CBK’s sales of electricity to the National Power Corporation as zero-rated, given that hydropower is a renewable source. (Commissioner of Internal Revenue v. CBK Power Company Limited, CTA EB No. 2801 CTA Case No. 10137, January 17, 2025)
THE CTA EN BANC DISMISSED THE CIR’S PETITION FOR RELIEF FROM JUDGMENT FOR BEING FILED WAY PAST THE 60-DAY AND 6-MONTH PERIODS AND FOR FAILING TO SHOW THAT COUNSEL’S LAPSES AMOUNTED TO EXCUSABLE NEGLIGENCE, REITERATING THAT CLIENTS ARE BOUND BY THEIR LAWYERS’ ACTS. The Court of Tax Appeals En Banc emphasized that a petition for relief from judgment is an equitable, exceptional remedy subject to the strict “double-period” rule—both (1) within 60 days from actual knowledge of the judgment and (2) within six months from its entry. These periods must be met simultaneously; noncompliance is fatal as they are jurisdictional. In this case, judgment was entered on August 19, 2022, but the CIR filed its petition only on March 31, 2023, well beyond the 6-month cut-off of February 19, 2023. The CIR also failed to prove the exact date when it received or learned of the judgment, preventing verification of the 60-day requirement. On substance, the CIR argued excusable negligence due to Atty. Tejada’s inaction, but the Court ruled this unavailing since the case had multiple counsels who could have intervened. Under settled doctrine, clients are bound by counsel’s acts or omissions, absent compelling exceptions—which were not shown here. Consequently, the En Banc affirmed the Special Second Division’s denial, stressing that procedural deadlines for this remedy admit no leniency. (Commissioner of Internal Revenue v. Unnamed Respondent, CTA EB No. 2833, January 16, 2025)
BIR RULINGS
INCOME TAX EXEMPTION GRANTED FOR REVENUES USED EXCLUSIVELY FOR EDUCATIONAL PURPOSES BY A QUALIFIED NON-STOCK, NON-PROFIT INSTITUTION. Pursuant to Section 30(H) of the National Internal Revenue Code of 1997, as amended, a Certificate of Tax Exemption was issued to a non-stock, non-profit educational institution proven to operate exclusively for educational purposes. The exemption covers income derived from tuition and school fees, as well as revenues from cafeteria, dormitory, and bookstore operations located within school premises, provided they are owned and operated by the institution and used directly for educational activities. Interest income from bank deposits used exclusively for educational purposes is likewise exempt from final taxes, subject to documentary compliance. The institution remains liable for taxes on unrelated income or profit-driven activities and is subject to VAT, percentage tax, and withholding tax where applicable. The exemption is contingent on continued compliance with BIR rules, including annual reporting, record-keeping, and submission of certified financial and operational documents. (BIR Ruling No. SH30-027-2025, January 14, 2025); SH30-036-2025, February 26, 2025).
CAPITAL GAINS TAX EXEMPTION GRANTED FOR A COMMUNITY MORTGAGE PROGRAM LAND SALE TO A QUALIFIED HOMEOWNERS’ ASSOCIATION. The sale of a parcel of land located in Brgy. Riverside, Calinan, Davao City under the Community Mortgage Program (CMP) to a duly registered homeowners’ association is exempt from capital gains tax. However, the transaction remains subject to documentary stamp tax under Section 196 of the Tax Code. The exemption does not authorize the transfer of land title unless a Certificate Authorizing Registration (CAR) is secured following the submission of documents required under RMO No. 15-2003. (BIR Ruling No. CMP-028-2025, January 14, 2025)TRANSFER OF LEGAL TITLE OF A CLUB SHARE BETWEEN TRUSTEES, WITHOUT CHANGE IN BENEFICIAL OWNERSHIP, IS NOT SUBJECT TO CGT, DONOR’S TAX, OR DST. Pursuant to Sections 24(C), 175, and 176 of the National Internal Revenue Code, as amended, and consistent with established jurisprudence, the Bureau of Internal Revenue ruled that the transfer of legal title over a proprietary club membership share from a former corporate trustee to a newly designated trustee, under a valid Declaration of Trust, is not subject to capital gains tax, donor’s tax, or documentary stamp tax, as there is no monetary consideration, no intent to donate, and no transfer of beneficial ownership – the beneficial title remaining with the corporate principal. The transaction is purely for administrative compliance with club membership rules requiring natural persons as registered holders. However, the notarial acknowledgment of the Declaration of Trust remains subject to DST under Section 188, and no Certificate Authorizing Registration or Tax Clearance is required to affect the transfer. (BIR Ruling No. OT-029-2025, January 17, 2025; BIR Ruling No. OT-046-2025, April 4, 2025)
INCOME FROM GAMING OPERATIONS BY A PAGCOR LICENSEE IS EXEMPT FROM CIT AND VAT SUBJECT ONLY TO 5% FRANCHISE TAX. A licensed operator authorized by PAGCOR to conduct electronic gaming activities is exempt from corporate income tax and value-added tax on income solely derived from its gaming operations. The exemption, as clarified in jurisprudence, inures to the benefit of PAGCOR’s licensees and contractees, who, like PAGCOR, are subject only to a 5% franchise tax on gross revenue from gaming operations, in lieu of all other national and local taxes. However, income from unrelated or non-gaming services shall remain subject to regular corporate income tax and VAT. (BIR Ruling No. OT-032-2025, (January 21, 2025)
SALE OF EDUCATIONAL E-MATERIALS NOT DEVOTED TO ADVERTISEMENTS IS VAT-EXEMPT. The sale of e-journals, e-books, and other electronic materials used for educational purposes, and not principally devoted to paid advertisements, is exempt from the 12% value-added tax. A corporation engaged in such transactions qualifies for this VAT exemption. However, if the entity engages in other non-exempt services such as bookbinding, engraving, or printing, those transactions remain subject to VAT, requiring separate VAT registration and invoicing. Additionally, while exempt on its sales of educational materials, the corporation is not exempt from VAT passed on by suppliers on its purchases, as VAT is an indirect tax borne by the buyer. (BIR Ruling No. VAT-033-2025, February 05, 2025)
TAX EXEMPTION IS GRANTED FOR A GOVERNMENT-CONTRACTED SOCIALIZED HOUSING PROJECT. A tax exemption was granted to a contractor engaged by a national housing agency for a socialized housing project consisting of five five-storey low-rise buildings with 300 units in Caloocan City, intended as relocation for informal settler families affected by a government infrastructure project. The exemption covers income tax and creditable withholding tax directly related to the project, and the sale of residential units is exempt from VAT provided the selling price per unit does not exceed ₱3,600,000. However, purchases of goods or services related to the project remain subject to VAT, and VAT-exempt receipts must be issued. This certification does not substitute for a Certificate Authorizing Registration (CAR), which must still be secured from the BIR following the proper process. (BIR Ruling No. NSH-034-2025, February 26, 2025)
RECONVEYANCE OF PROPERTY UNDER A COURT-DECLARED TRUST IS NOT SUBJECT TO CGT OR DST. No capital gains tax or documentary stamp tax applies to a court-ordered reconveyance of real property where no consideration is involved and no capital gain is presumed to have been realized. In this case, two parcels of land registered in the name of a former director were judicially confirmed to be held in trust for a corporation, which had continuously possessed, used, and paid real estate taxes on the properties. A final and executory decision declared the existence of a resulting trust and ordered reconveyance to the true owner. As the transfer was merely to restore legal title to its rightful holder and did not involve a sale or exchange, it is not subject to CGT or DST, except for the ₱30.00 DST on the notarial acknowledgment under Section 188. (BIR Ruling No. OT-035-2025, February 26, 2025).
MANDATED TRANSFER OF SHARES TO THE REPUBLIC THROUGH A GOVERNMENT COMMISSION PURSUANT TO ADMINISTRATIVE ORDERS IS EXEMPT FROM CAPITAL GAINS TAX, DONOR’S TAX, AND DOCUMENTARY STAMP TAX. The transfer of shares from certain corporations to the Republic of the Philippines through a government commission is not considered a sale, donation, or taxable conveyance. The transaction was undertaken solely to comply with the directives of the administrative orders, without any donative intent or commercial exchange. As such, the Bureau of Internal Revenue ruled that the transfer is exempt from capital gains tax due to the absence of a sale or disposition, from donor’s tax for lack of liberality, and from documentary stamp tax as it is not a taxable conveyance under the law (BIR Ruling No. OT- 40-41-2025, March 13, 2025).
DONATION OF REAL PROPERTIES TO A LOCAL GOVERNMENT UNIT IS EXEMPT FROM DONOR’S TAX AND DOCUMENTARY STAMP TAX (DST), EXCEPT FOR THE DST ON NOTARIZATION. Donations made to political subdivisions of the national government are exempt from donor’s tax. In this case, the transfer of parcels of land from a private entity to a local government unit qualifies for such exemption, being a gratuitous transfer to a political subdivision. The transaction is likewise exempt from documentary stamp tax, except for the P30 DST. (BIR Ruling No. DT-042-2025 (March 24, 2025).
THE SALE OF LAND TO A LOCAL GOVERNMENT FOR A SOCIALIZED HOUSING PROJECT IS EXEMPT FROM CAPITAL GAINS TAX BUT SUBJECT TO DOCUMENTARY STAMP TAX. The transfer of a parcel of raw land from private owners to a local government unit for use in a qualified socialized housing project is exempt from capital gains tax. However, the transaction remains subject to documentary stamp tax, and title transfer shall require an eCAR from the BIR with an annotation stating “Intended for Socialized Housing Project.” (BIR Ruling No. OT-043-44-2025, March 24, 2025).
SALE OF CARBON EMISSION CREDITS BY A REGISTERED RENEWABLE ENERGY DEVELOPER ARE EXEMPT FROM ALL TAXES. Republic Act No. 9513, as implemented by Revenue Regulations No. 7-2022, grants full tax exemption on proceeds from the sale of carbon emission credits by duly registered Renewable Energy developers. The developer transferred carbon emission credits generated from a solar rooftop project to a foreign government in exchange for funding, under an agreement fulfilling all requisites of a valid contract of sale – consent, determinate subject matter, and price certain in money. As the transaction constitutes a sale in substance and aligns with the objectives of the bilateral low-carbon growth partnership, the proceeds are exempt from income tax, VAT, and all other taxes pursuant to RA No. 9513 and related regulations. (BIR Ruling No. OT-045-2025, April 3, 2025)
REVENUES FROM SALES AND SERVICES BY A NON-STOCK, NON-PROFIT ENTITY ARE SUBJECT TO VAT AS TAXABLE INCOME, NOT EXEMPT CAPITAL CONTRIBUTIONS. Any person, including non-stock, non-profit organizations, engaged in the regular sale of goods or performance of services for a fee is liable for VAT regardless of profit intent, unless specifically exempt under Section 109. A non-profit religious institution sought VAT exemption for proceeds from sales of religious materials, facility rentals, training services, and licensing, asserting these were capital infusions. The BIR ruled that the receipts are payments for goods and services, not funds held in trust, and therefore constitute taxable income. Since the transactions fall within the statutory definition of sale of service and are not listed among VAT-exempt transactions, they are subject to VAT despite the entity’s non-profit status. (BIR Ruling No. OT-047-2025, April 4, 2025)
A REGISTERED DOMESTIC MARKET ENTERPRISE AVAILING OF THE 5% GROSS INCOME TAX BEFORE CREATE REMAINS EXEMPT FROM REGULAR INCOME TAX AND 5% CREDITABLE WITHHOLDING TAX ON RENTAL PAYMENTS FOR UP TO TEN YEARS. Income payments to entities registered in special economic zones and enjoying income tax exemption are not subject to creditable withholding tax. A domestic market enterprises already availing of the 5% tax on gross income prior to the CREATE Law’s effectivity may continue such incentive for a maximum of ten years. Applying this, a registered enterprise engaged in industrial development and leasing activities remains entitled to the 5% preferential tax rate in lieu of all national and local taxes during the transition period, and its lessees are not required to withhold the 5% creditable withholding tax on rental payments. BIR Ruling No. OT-048-2025 (April 4, 2025)
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BIR DEADLINES
BIR DEADLINES FROM AUGUST 18 TO AUGUST 24, 2025. A gentle reminder on the following deadlines, as may be applicable:
| DATE | FILING/SUBMISSION |
| August 20, 2025 | e-FILING/FILING & e-PAYMENT/PAYMENT – BIR Form 1600 WP (Remittance Return of Percentage Tax on Winnings and Prizes Withheld by Race Track Operators) – eFPS & Non-eFPS Filer – for the Month of July 2025s |